Indignant DeConcini Denies Misconduct : ‘Keating Five’: ‘He wants a victim,’ senator says of ethics panel counsel.

Sen. Dennis DeConcini (D-Ariz.), in an indignant rebuttal to charges of official misconduct, Monday accused the Senate Ethics Committee’s chief investigator of manufacturing a case against the “Keating Five” through hearsay and newly minted standards of conduct.

“He wants a victim,” the senator declared, referring to Robert S. Bennett, the committee’s special counsel. “He wants to nail somebody. He wants another trophy on the wall.”

Unlike the four other senators, who told the committee last week why they should not face discipline for violating Senate ethics standards, DeConcini also defended Lincoln Savings & Loan owner Charles H. Keating Jr. Keating has become a symbol of the savings and loan scandal that could cost taxpayers as much as $500 billion, according to some estimates.

In his two-hour rebuttal, DeConcini recalled that Keating had contributed millions of dollars to many charities and that Mother Teresa, a recipient of Keating’s contributions, once described the controversial thrift executive as “my good friend.”

DeConcini is one of five senators accused of helping Keating delay federal enforcement action against Lincoln while he mismanaged the Irvine thrift. According to charges brought by Common Cause, the five allegedly acted in exchange for large campaign contributions from Keating.

The Arizona Democrat, who received $81,000 in campaign contributions from Keating and his associates, insisted that there is no rule of conduct that prohibits senators from intervening with federal regulators on behalf of campaign contributors.

“What is wrong with intervening for someone that sends you a check for your campaign?” he demanded. “Nothing.”

In response to DeConcini’s criticism of his conduct, Bennett denied that he is setting new standards of conduct for the senators. He said that he based his analysis of their actions on rules--both formal and informal--that members of the Senate have observed for years.

“These are your standards, these aren’t my standards,” he insisted. “And just because you can’t go to the Government Printing Office and say: ‘Hey, give me the ethical standards,’ doesn’t mean they don’t exist.”

The issue of standards is likely to determine the outcome of the Keating Five case, according to attorneys involved. While most of the facts in the case are not in dispute, the senators have widely differing ideas of what rules apply.

Like DeConcini, Sen. Alan Cranston (D-Calif.) argued last week that there is no standard of conduct prohibiting what he did for Keating. Cranston and DeConcini were judged by Bennett to have played the biggest roles in the scandal.

James Hamilton, DeConcini’s lawyer, asserted that his client did nothing different from what many senators do for their constituents.

“Who knows how many members of the Senate would be found culpable under this standard,” he warned.

After DeConcini’s presentation, the committee began to hear witnesses in the case. It became clear that Bennett intends to use the behavior of Sens. John McCain (R-Ariz.) and John Glenn (D-Ohio), whom he has exonerated, as a standard against which he will judge the behavior of the other three--DeConcini, Cranston and Sen. Donald W. Riegle Jr. (D-Mich.).

Both McCain and Glenn refused to continue assisting Keating after they learned in April, 1987, that federal regulators had referred charges against Lincoln to the Justice Department for criminal investigation. In addition, McCain has said that he objected when DeConcini sought to negotiate with federal regulators on Keating’s behalf.

Gwendolyn Van Paasschen, an aide to McCain who testified after DeConcini spoke, corroborated her boss’ testimony.

But DeConcini accused Bennett of constructing his case against the senators based on “hearsay . . . rumors . . . unfounded allegations.” He said that many of the interviews Bennett conducted during his investigation were flawed and full of misinformation.

Furthermore, he said, Bennett had prejudiced the case in his opening remarks last week by using the word “bribery,” by calling Keating a “crook” and by noting that thousands of investors lost $220 million by buying uninsured Lincoln bonds.

“I resent that man tying this senator to bribery, to a crook, to the bondholders,” he said.

DeConcini also assailed the motives of Common Cause, a citizens’ lobby and a proponent of campaign finance reform.

“They are trying to raise money. They are trying to damage the reputation of these five senators. They are trying to pass legislation,” he said.

The Arizona senator characterized himself as an aggressive lawmaker who goes to bat for all his constituents, whether or not they contribute to his campaign. He cited four examples of cases in which he used his office to bargain for constituents, some of them contributors:

--Three weeks ago, when he received a call from President Bush seeking his support for a bill pending before the Senate, DeConcini asked the President to look into the case of a military man, who believes that he is the victim of discrimination.

--Earlier this year, he tried to persuade Defense Secretary Dick Cheney to reverse the Pentagon’s decision to cancel a contract for 132 helicopters manufactured by McDonnell Douglas Corp., a campaign contributor that employes 5,000 workers in Arizona.

--Several years ago, he asked then Interior Secretary Donald Hodel to lift regulations opposed by cotton farmers, many of whom had contributed to his campaign.

--Just recently, he intervened with the Immigration and Naturalization Service on behalf of an Arizona couple who had been prohibited from bringing into the United States a child adopted in Turkey.

At the heart of the case against DeConcini is the charge that he sought to negotiate on behalf of Keating with federal regulators in meetings in April, 1987. DeConcini both denied that he negotiated, or that such negotiations would have been wrong.

Taking the same tack, Cranston’s lawyer, William Taylor III, said that the senators are in danger of becoming scapegoats for the collapse of the savings and loan industry, just as goats were sacrificed in the Old Testament to help atone for the sins of the people.

“In a tragedy like Lincoln, human nature demands someone be punished,” said Taylor, who is representing Cranston at the hearings while the California senator undergoes radiation treatments for prostate cancer in California.

Nobody has alleged that Cranston personally benefitted from any of the large sums of money contributed by Keating, Taylor emphasized, nor has anyone accused him of trying to bully the regulators. “There was no yelling and screaming, no demands, no foul language,” he said.

Instead, he said, the question being asked at these hearings is whether Cranston went too far representing a constituent. “The only thing that anyone has said about Sen. Cranston is that he was persistent in trying to reach people,” Taylor said.

Cranston has said that he was responding to complaints that Lincoln was being treated unfairly by regulators through an excessively long financial examination.

“The notion that Alan Cranston’s integrity was bought is preposterous,” Taylor said.

Bennett, a private attorney who was hired by the committee to investigate the Keating Five case, denied that he was after any senatorial scalps. “I work in a lawyer’s paradise,” he said. “The only trophy I want is a big brown trout.”

Defenders of the accused senators have argued that every member of Congress acts as they did in handling the demands of campaign contributors for help but Bennett disagreed. “I’ve been investigating for a year--everybody doesn’t do it,” he said. “This case is an aberration.”

He said the ethics committee should not shy away from applying a standard of proper conduct because to do otherwise would undermine “the respect the American people have for this institution.”

In her testimony, Van Paasschen recalled that a rift developed between McCain and Keating after the Arizona Republican refused to “negotiate” on Keating’s behalf with S&L; regulators, as DeConcini had suggested. Likewise, she said, Keating “was very angry” during a March, 1987, meeting in which McCain refused to fight for Keating.

Despite his personal quarrel with Keating, McCain agreed to attend a meeting with regulators to see if Lincoln was being treated unfairly, she said. He did it because Lincoln’s parent firm, American Continental Corp., employed 2,000 people in Arizona.

In Los Angeles, meanwhile, the state filed revised fraud charges against Keating in connection with the sale of securities of American Continental Corp. through the branches of Lincoln S&L.; The new charges give specific examples of alleged lies told to state officials who regulate securities.